Monday, July 6, 2015

We are glad to inform you that our Hidden Gem stock of Jan'13 - TCPL
Packaging Ltd (BSE Code: 523301) has turned to be a 8.5 Bagger stock for our members in period of 30 months. Our team suggested Buy on TCPL Packaging Ltd at
average price of 70.50 on 31st Jan'13 with a target price of Rs. 160. We suggested our members to continue to hold once target was achieved, stock has made its all time high of Rs.620 today and currently trading at Rs. 595 giving whopping returns of 744% to our members in period of 2.5 years.

TCPL has posted strong set of numbers in its last quarter, net profit of TCPL rose 104.72% to Rs 8.68 crore in the quarter ended March 2015 as against Rs 4.24 crore during the previous quarter ended March 2014. Sales rose 18.46% to Rs 126.97 crore in the quarter ended March 2015 as against Rs 107.18 crore during the previous quarter ended March 2014.

For the full year, net profit rose 157.52% to Rs 32.19 crore in the year ended March 2015 as against Rs 12.50 crore during the previous year ended March 2014. Sales rose 25.93% to Rs 491.16 crore in the year ended March 2015 as against Rs 390.04 crore during the previous year ended March 2014.

As we believe company will continue to deliver great set of numbers with robust growth in revenue and profitability going forward, we suggest our members to continue to hold the stock for more gains.

Below is the summary of TCPL Packaging Ltd shared by our team under Hidden Gem stock recommendation - Jan'13

1. Company
Background

TCPL
Packaging Ltd., (formerly known as Twenty-First Century Printers Ltd) was
promoted by the Kanoria family, and began commercial production in April 1990.
It is one of India's largest manufacturers of printed folding cartons, and one
of the few listed packaging companies in India.

Today, TCPL Packaging Ltd. operates out of its six manufacturing
units ; three in Silvassa, 180 kms from Mumbai in Western India ; two in
Haridwar, 200 kms from Delhi in Northern India ; and one in Goa, 600 kms from
Mumbai in Western India. All the plants are ISO 9001: 2008, ISO 22000: 2005
certified and are also compliant with BRC/IoP Global Standard-Packaging Issue
3, which is suitable for direct food contact. In addition, plants at Silvassa
and Haridwar are also FSC certified & SEDEX Compliant.

TCPL is one of the largest exporters of printed cartons from
India. It regularly caters to consumers in countries like UK, The Netherlands,
UAE, Bangladesh etc. Exports constitute about 17% of TCPL's annual revenues.

TCPL won several awards for excellence in printing
from Paper, Film & Foil Converters Association for cartons manufactured for
various customers. TCPL has core manufacturing business and enjoys reputation
of a reliable packaging company for supply of various types of packaging
materials to large foreign and domestic companies. It is presently
consolidating its operations and working on new product offerings.

As part of its expansion plans, TCPL recently
purchased an additional plot of land in the vicinity Haridwar plant to set up a
corrugation unit that will mainly produce E-flute corrugated cartons. The unit
commenced operation by Q1FY13.

For the financial year ended 31st March
2012, TCPL's revenues were Rs.295.68 crores (US$ 59 million) registering a CAGR
in excess of 20% over the past five years. TCPL is currently converting
approx. 3500 tons of paperboard every month, making TCPL one of India’s largest
converters of paperboard.

Production
Facilities

1. The
Silvassa Factory

TCPL Packaging is now operating three plants at Silvassa. Of the
three plants, one houses the web fed gravure machines, the second houses sheet
fed offset machines and the third is a dedicated facility for corrugated
cartons. As a result the Silvassa operations are extremely versatile allowing
TCPL to offer printing on a variety of substrates and combinations thereof, as
also capability to cater to a variety of requirements depending on the nature
of the job in terms of volume and print appearance

Gravure
Packaging Unit: This exclusive gravure printing facility was set-up in January
2010 and houses three 10 colour gravure presses all with inline die cutting
facilities. Of the three presses, two have been imported earlier from Komori
Chambon and the third and latest one is imported from ATN Industrie, France.
Two of the above three presses have the capability to rotary die cut and emboss
inline besides printing in one operation. The plant is also equipped with a
specialised Bobst offline die cutting and foil stamping machinery besides
facilities for lamination of film to board. The printing machines are also
equipped with online defect detection camera to guarantee 100% defect free
supplies. Offset
Packaging Unit: This unit houses three MAN Roland 700 offset presses all of which
are six colour with inline coaters. The plant is also equipped with multiple line
Bobst folder-gluers and die-cutters as well as window patching machines.
Besides, the facility also has equipments for hot foil stamping, automatic film
lamination and every other conceivable finishing capability. Of the three
offset machines, one is equipped with interdeck UV driers capable of printing
on plastic and non-absorbent substrates. The die-cutter and folder gluers are
also similarly equipped to handle plastic substrates. In addition, a sheet fed
gravure printing machine has also been recently commissioned, enabling the
plant to print by both offset and gravure or in combination thereof. Fluted
Carton Unit: This unit set-up in March 2010 is a dedicated facility for
production of E / F fluted cartons. It houses 2 lines of E/F fluting
corrugation single facers, Litho Laminator, three special die cutting equipment
designed for fluted cartons and specialised folder gluers from Bobst equipped
for gluing/folding of fluted cartons. The plant is also equipped with a hot
room for control of moisture and is fully equipped to handle sophisticated
requirements of E / F fluted cartons. 2. The Haridwar
Factory TCPL Packaging is now operating two plants at Haridwar. Of the two
plants, one houses the sheet fed offset machines, and the second one is a
dedicated facility for corrugated cartons. Offset Packaging Unit Printing: Haridwar plant is equipped with two Mitsubishi LX six color sheet
fed offset printing machines, one KBA 106 six color sheet fed offset printing
machine equipped with in-line coaters besides a sheet-fed gravure printing
machine to enable it to print offset-gravure combination jobs. Die-cutting: Multiple number of state-of-art die cutters from Bobst with
in-line stripping facility. Folding & Glueing: Multiple lines of high speed folding and glueing facilities from
Bobst equipped with crash lock bottom devices. Folding & Glueing equipment at Haridwar plant is equipped with
a Code Reader Xtend Series from Baumer HHS in combination with lower glue line
detection. Window Patching / Liner Capability: Three Heiber
& Schroder Window Patching machines with liner capability. Fluted Carton Unit This unit set-up in March 2012 is a dedicated facility with
state-of-the art technology for production of E / F fluted cartons. It houses
one line of E / F fluting corrugation single facer, Litho Laminator with all
latest and automated features, special die cutting equipment designed for
fluted cartons and specialised and renowned folder gluer equipped for
gluing/folding of fluted cartons. The plant is also equipped with latest
testing equipments for quality assurance and a hot room for control of moisture
and is fully equipped to handle sophisticated requirements of E / F fluted
cartons. 3. The Goa
Factory TCPL
operates one plant at Goa. This unit set-up in July 2012 is a dedicated
facility for production of E/F/N fluted cartons. It houses 2 lines of E/F/N
fluting corrugation single facers, Litho Laminator, three special die cutting
equipment designed for fluted cartons and specialized folder gluers from Bobst
equipped for gluing E/F/N and straight line glued cartons at high speed. The
plant is also equipped with a hot room (de- humidifier) for control of moisture
and is fully equipped to handle sophisticated requirements of E/F/N fluted
cartons. The Prepress
Centre TCPL always put best of its efforts to exceed customer
expectations. It is with this objective that TCPL has promoted a company viz.
Accura Reprotech Pvt. Ltd., (ART) based out of Mumbai which is responsible for
prepress and repro activities of the company. ART has been set-up to focus on areas such as
structural and graphic design, use of varied raw material and suggesting to
customers, different types of finishes to be incorporated in their packaging. This centre is located in heart of Mumbai making it easy for
customers to visit the centre and experiment with different possibilities. ART is equipped with Esko Graphics Suite 10 PDF enabled workflow
and has all facilities under one roof geared up for designing, editing and
processing of jobs. The facility is also equipped with the latest Kongsberg
Sample Table for the production of printed / unprinted cartons including
complete proofing facility. ART is connected to both manufacturing plants by dedicated leased
lines and to customers via FTP (File transfer protocol). Product
Portfolio 1. CIGARETTES: TCPL
Packaging Ltd. is currently catering to the Phillip Morris and BAT associate
companies in India and other leading cigarette manufacturers in the region. TCPL can undertake both long and short run jobs either by gravure
or offset process. The packs are subject to stringent quality checks such as GC
tester and crease stiffness tester which are available at its laboratories. In the financial year ended 31st March 2012, TCPL produced in
excess of 2.2 billion packs for the tobacco industry. The significant benefit that TCPL can offer its customers in the
cigarette industry is its capability to offer value additions by way of UV
varnishing, offset gravure combination, matt/gloss varnishes etc. 2. LIQUOR: TCPL is
currently one of the largest manufacturers of liquor cartons in India, catering
to all liquor majors in the industry. With its versatile printing facility, it
can manufacture liquor cartons with inline UV varnish as well as die cutting in
a single operation. A significant amount of its revenues comes from sales to liquor
majors such as Pernod Ricard, Diageo, United Spirits, Radico Khaitan, Jagatjit
Industries, Allied Blenders, Bacardi and other liquor producers. TCPL possesses the unique capability of printing by a combination
of offset and gravure thereby enhancing the look of the pack in a very cost
effective manner. 3. FOOD: TCPL is a
regular and approved vendor to leading food and beverage manufacturing
companies in India such as Nestle, General Mills, Ferrero, GSK, Kellogg India,
Heinz, Amul, Hindustan Unilever, Tata Global Beverages, Cadbury/Mondelez
International and many other smaller Indian companies. Besides, TCPL is a
regular exporter to the food and bakery industry in UAE, Netherlands and UK. Amongst TCPL's capabilities include conversion of 4 and 6 corner
glued cartons and liner cartons. It is one of the few Indian packaging companies to have achieved
BRC and SEDEX certification. 4. FMCG: Having
online coating and expertise in surface printing on metallised polyester
laminated board and plastic substrates. TCPL caters to a large number of
clients in the FMCG sector. Besides, TCPL also assists its customers in product innovation and
design. Its extensive expertise in providing customers with both structural
& graphic design is a big advantage for its customers to offer value added
and unique packaging for the market place. TCPL has been increasing its customer base in this arena and
catering to a wide variety of companies. Amongst its many customers are
Hindustan Unilever, Emami, Anchor, Colgate, Godrej Sara Lee, Godrej Consumer
Products, Cavin Kare, Marico, Johnson & Johnson, S.C.Johnson, Cholayil,
Hygeinic Research, etc. Both offset plants are equipped to print on met pet substrates
besides having hot foil stamping capabilities and capability to glue with hot
melt as well as PUR based adhesives. 5. OTHERS: TCPL's
clients include host of other customers in segments such as automobile,
stationery, pharmaceuticals and the airline industry. TCPL is already supplying to highly reputed international airline
companies such as Gulf Air, KLM and Indian airline companies such as Kingfisher
and Jet Airways. In the stationery segment, TCPL caters to one of the largest
stationery products manufacturer in the country, Hindustan Pencils Ltd. In the automobile industry, TCPL is an established supplier to
industry leaders, Mico Bosch & Tata Motors. 2.
Recent Development (31st Jan'13)1. TCPL Packaging inks technical
collaboration agreement with AR Packaging Group TCPL Packaging has signed a
technical collaboration agreement with AR Packaging Group AB, Lund Sweden. The
objective of the agreement is a strategically partnership mainly in the
manufacturing, sourcing and sales and marketing in India for solid folding
cartons. The board at its meeting held on November 10, 2012 has taken the note
of it. AR Packaging Group AB, offers packaging and packaging
machinery solutions, cardboard packaging and folding cartons to various market
segments. The company also offers solid board solutions as secondary packaging
for brewery products, and solutions for various consumer products, including
confectionery, cereals, fast food, frozen food, tobacco, pet food, and non
food. The manufacturing activities are carried through 14 production plants in
eight European countries alongside operating sales offices in Asia, Europe,
Africa and the US. It is headquartered at Malmo, Sweden. 2. Capacity
Expansion to meet customer needs and to offer Innotive packaging solutions During the FY12, TCPL added a
third printing machine at Haridwar. During the last 5 years, TCPL has spent
about 150 crore and enhanced its capacity to 50,400 TPA from 21,000 TPA in
FY07. TCPL's corrugated cartons plant at Haridwar commenced production from
March 2012. Besides, TCPL is also adding a new facility for manufacturing of
corrugated cartons at Goa. The total Capex incurred at various locations was to
the tune of 33 crore for the year 2011-12. TCPL Packaging Ltd, one of the
largest manufacturers and leading exporter of printed cartons in India. TCPL
has three manufacturing units in Silvassa and two in Haridwar, Uttarakhand and
one in Goa. TCPL is an ISO 9001:2008, ISO 22000:2005, BRC/IoP certified and
SEDEX Compliant packaging company. TCPL also produces a wide range of products
such as printed blanks & others, Folding Cartons, Litho Lamination, Plastic
cartons, Blister paper, Shelf ready packaging. It caters to the segments like Cigarette,
Liquor, Food, FMCG etc. 3.
Key Concerns / Risksi) The company’s customers are large and price setters
and may have limited pricing power in times of high cost pressures. This may
result in shrinking margins which can adversely affect the bottomline of the
company. ii) The Company being a manufacturer of the packaging
material required for cigarette and liquor is always exposed to the general
risks such as government regulations and policies, statutory compliances,
economy related, market related. iii) New projects at Haridwar and Goa and increase in
customer demand simultaneously leads to pressure on the profit margins as the
Company has to face competition from various manufacturers in the domestic
market. 4.
Saral Gyan Recommendation (31st Jan'13)i) Packaging industry in India is
one of the fastest growing Industries, which has its influence on all
industries directly or indirectly. The
Indian packaging industry is above $ 20 billion with a growth rate of above 15%
per annum which is expected to increase further and offers great
business opportunity for TCPL Packaging Ltd. ii) Packaging of essential products like
food, beverage and pharmaceuticals are the key driving segments because of the
huge domestic consumption. India is ranked 15th in the world for its paper and
paperboard consumption and is expected to improve its rank in the future. In
India, per capita paper consumption is still only 10 kg as compared to 42 kg in
China and world average of 57 kg. iii) Growth
in use of packaged goods as life style changes (urbanization) and manufacturing
off-shoring from developed countries increase need for packaging Materials. Other factors affecting growth of packaging industry in
India are urbanisation, increasing health consciousness, changing food habits,
global trends for plastic substitution in many end use applications and cost
advantage. iv) Company’sdebt to equity is high and interest coverage
ratio is also low. This combination is generally not a good signal and doesn’t
warrant a value investment. But we expect higher interest coverage ratio and
lower debt over next 1/2 years which will strengthen balance sheet and support
higher valuations for the stock. v) Considering recent expansion and growth opportunities in the
industry, we expect TCPL to deliver bottom line of 141 million for FY’12–13 and
216 million for FY’13–14 with estimated annualized EPS of Rs. 16.2 & 24.9
respectively. Company has paid consistent
dividend year after year and dividend yield at CMP is 2.7%. vi) On equity of Rs. 87 million, the estimated annualized EPS for FY
12-13 works out to Rs. 16.20. Book value per share is Rs. 87.43 and stock price
to book value is 0.86. At current market price of Rs. 74.85, share is trading
at a P/E of 4.6X on FY 12–13 and 3.0X on FY 13–14 which makes stock valuations
attractive with a medium to long term view of 18-24 months. Considering
attractive valuations and long term growth potential, Saral Gyan Team
recommends “BUY” on TCPL
Packaging Ltd for a target of Rs. 160 over a period of 18-24 months.

TPCL
Packaging Ltd is 1 out of those 22 multibagger stocks which have given returns
in the range of more 100% to 1500% returns to our subscribers in last 4 years.
Team of equity analysts at Saral Gyan put lot of efforts & smart
work to identify Hidden Gems (Unexplored Multibagger Small Cap
Stocks) and Value Picks (Mid Caps with Plenty of Upside Potential)
which not only grow your capital at a healthy rate but also ensures
protection of your capital during market downturn.

An
opportunity missed an opportunity lost. Start building your equity portfolio by
investing in Hidden Gems and Value Picks of stock market. The stocks we
reveal through Hidden Gems & Value Picks are companies that are
either under-researched or not covered by other stock brokers and research
firms. We keep on updating our subscribers on our past
recommendation suggesting them whether to hold / buy or sell stocks on the
basis of company's performance and future outlook.

Saral Gyan Capital Services

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